Behind Big Plan, Small Fights a Brewin’

Posted January 7, 2009 at 6:50pm

Though lawmakers in both parties are quickly lining up behind a massive economic stimulus plan, a series of smaller fights is percolating just below the surface as various factions push for larger slices of the pie.

Some Members are pushing for more money for roads, others for energy, housing, education, aid to the states, food stamps and more — even as budget hawks cringe at a deficit projected by the Congressional Budget Office to soar to $1.2 trillion without stimulus spending.

The reality is that lawmakers see a small window for a legislative gravy train before grim budget realities begin to force rounds of fiscal austerity, and while some Democrats are deferring big decisions to President-elect Barack Obama, many lawmakers want to have their say.

Liberal Democrats have been pushing for a larger package focused more on items such as food stamps and aid to the unemployed, while fiscally conservative Blue Dog Democrats are trying to keep the bill at the $675 billion-to-$775 billion level outlined by Obama.

Meanwhile, Ways and Means Chairman Charlie Rangel (D-N.Y.) talked of requiring governors to target aid to heavily impacted communities rather than giving them carte blanche to spend money as they saw fit.

Other Members have been trying to figure out a way to ensure that their districts will benefit, despite demands from Obama and a pledge from Appropriations Chairman David Obey (D-Wis.) that the package will not include earmarks.

Obama himself declined to set a final figure on Wednesday, saying he was still conferring with Members of Congress, and that it could be hard to contain a bill with so many legislative mouths to feed.

Republicans are acknowledging the need for an economic stimulus but want the emphasis to be on tax cuts rather than spending.

There is little dispute, however — except from some of the most conservative Republicans — over the need for a significant package despite the daunting new deficit number.

Leading economists from both sides of the political spectrum told Democrats on Wednesday that a massive stimulus plan is needed as soon as possible, with the economy losing 500,000 jobs a month and no end in sight.

“This is not a time to be worried about the debt,” said former Clinton Labor Secretary Robert Reich, who, along with Moody’s economist Mark Zandi and former Reagan administration economist Martin Feldstein, warned that unemployment will continue to rocket higher without massive government intervention.

“This economy is shutting down,” said Zandi, a former adviser to Republican presidential nominee Sen. John McCain (R-Ariz.). He urged focusing on aid to states, unemployment insurance, preventing foreclosures and food stamps as “slam dunks.”

Republican leaders released their own list of economists skeptical of deficit spending as a stimulus, with House Minority Leader John Boehner (R-Ohio) arguing that “we can’t simply borrow and spend our way back to prosperity.” Boehner cited soaring debt projections to underscore his concerns about the spending piece of the package.

Obama heartened fiscal conservatives by repeating his vow to develop a plan to close the long-term fiscal gap even as he pursues a massive short-term spending plan. He said he expected to have more details by mid-February when he releases his fiscal 2010 budget outline.

House Budget Chairman John Spratt (D-S.C.) and Senate Budget Chairman Kent Conrad (D-N.D.) both called on Obama and their colleagues to put in place a process to grapple with the long-term fiscal deficit later this year. Conrad called the new deficit figures — which could reach $2 trillion when stimulus and other debts are added in — “jaw-dropping” and a wake-up call.

“We have to pivot once the recovery is under way,” he said.

“The first year, this is the time to do big things that need to be done,” Conrad said.

But in the meantime, Conrad said, what he’s seen so far of Obama’s stimulus proposals comes up short on infrastructure, investments in energy and in stimulating the moribund housing industry. Conrad said he’d also like to see housing tax credits and provisions to buy down homeowners’ interest rates.

But both Conrad and Spratt warned they would fight efforts to add permanent tax cuts or permanent new spending programs.

Rep. Jim Cooper (D-Tenn.), a leading fiscal conservative, praised Obama’s commitment to shrinking the long-term, $50 trillion-plus budget gap even as he pursues a stimulus. “Government can walk and chew gum at the same time,” Cooper said. “We can stimulate the economy and deal with the long-term problems.”

Cooper said he and fellow Blue Dogs understand the need for spending now but don’t want it to be any larger than it has to be. “Every dollar spent today will have to be repaid,” he said. “It’s a gut check. This is a genuine emergency, but there’s no free lunch.”